COLLEGE ATHLETES CAN UNIONIZE—BUT WHAT ARE THE IMPLICATIONS FOR THE NCAA AND BEYOND?

By Bonnie H. Shu, Attorney at Law

In a shocking (or perhaps not so shocking) move, a Regional Director of the National Labor Relations Board has held that football players receiving scholarships at a private university are “employees” of the university for which they play for, thereby permitting them to organize under the NLRA. This decision comes in the midst of attempts to challenge NCAA rules aimed at preserving the amateur status of college athletes. The proposed bargaining unit at issue in Northwestern University, Case No. 13-RC-121359, was delineated as: all football players receiving football grant-in-aid scholarship and not having exhausted their playing eligibility employed by the Employer located at 1501 Central Street, Evanston, Illinois [Northwestern University’s Athletic Department].

Northwestern University is a private educational institution. Approximately three quarters of its football team receives grant-in-aid totaling about $61,000 per player for tuition, fees, room, board, and books. NCAA rules prohibit additional compensation with limited exceptions. The players do not pay taxes on any of the monies received from the university. Scholarships are contingent upon various terms and conditions, and may be rescinded if warranted by an athlete’s misbehavior.
Players are also subject to particular rules imposed by the Athletics Department, such as restricting where players are permitted to live, imposing a social media policy, and prohibiting any conduct which might tend to “embarrass” the team. Players must sign a release for the University to use their name, likeness, and image for any purpose, but they are prohibited from profiting off of their image or reputation. Players are given detailed daily itineraries as to the activities which they must attend and also what players are to eat for their meals. From its football program, Northwestern University generated $30.1 million in revenue in 2012-2013.

Applying the common law test of “employee,” that is, “whether the individual performs services for another under a contract of hire, subject to the other’s control or right of control, and in return for payment,” Regional Director Peter Ohr found that the players satisfied this test. The players performed services for the benefit of Northwestern, receiving scholarship monies in return. The players were subject to the control of Northwestern, as players were given daily itineraries governing what players did each hour of the day and could be punished for violating any team rules.

Accordingly, football players who received scholarships “fall squarely within the Act’s broad definition of ‘employee,’” although walk-ons did not constitute employees since no compensation is received. The Regional Director also found that the petitioned-for bargaining unit shared an overwhelming community of interest, concluding this by simply rejecting the University’s assertion that exclusion of walk-ons would result in a fractured unit, and exclude players who share the same community of interest. Northwestern has stated that it will appeal the decision to the NLRB, but this begs the question for now—does excluding 25% of the team create a fractured or arbitrary unit?

Theoretically and, in a coach’s perfect world, a team is supposed to act as a cohesive unit. But, as egos flare and teammates vie for draft pick positions, is that truly the case? Will “employees” on the starting lineup share the same interest in “wages, hours, and working conditions” bargain for and receive different disciplinary and academic treatment as walk-on team members? As it currently stands, scholarship monies are typically evenly distributed amongst athletes. Will collective bargaining result in greater “payment” made to the star quarterback over one of the many linebackers? Will collective bargaining intrude into the level scholarships and support that may be offered? If collective bargaining is to result in revenue sharing, such compensation would go beyond that which the university has deemed necessary for tuition and living expenses for all other athletes given the minimum scholarship amount. Will the additional monies then be considered “profit” in violation of NCAA rules? Will student athletes now be required to pay taxes on this compensation?

It is also unclear what the “wages, hours, and terms and conditions of employment” shall be for the mandatory subjects of bargaining. Will players be able to bargain over scholarship levels, revenue sharing, bonuses for performance, disciplinary procedures, drug testing, and play time for senior students? Unions were created to protect workers who, individually, had no voice to speak up against the employer. However, a college team is not designed to be egalitarian amongst “employee” and “employer.” As Denzel Washington’s character, Coach Boone, states in Remember the Titans, “This is no democracy. It is a dictatorship.” But now, athletes are given input into aspects of the game and perhaps aspects of their education which are strictly within the purview of a coach and educational institution, and athletes activities which a coach might otherwise prohibit may now be protected “concerted activities.” For instance, the Northwestern’s social media policy, a popular target of the NLRB, will need to be reworked. Organized players cannot be prohibited from complaining about their employers’ “working conditions,” and disputes arising over policies against “embarrassing” the school will be probable.

Coaches are also notorious for flying off the cusp in the heat of the game (take the classic Bobby Knight chair-throwing example). Coaches will now have to watch what they say and how they say it. One of the most glaring issues will be how to address a coach’s imposition of discipline on a player.

Likewise, unionized student athletes means that they could potentially go on strike, or a lockout may ensue. This will now be an added consideration for universities who bring in substantial revenue from their athletic programs and who may need to be prepared with the prospect of foregoing an entire season of play, as seen in the infamous 2012-2013 National Hockey League lockout. It is unlikely that a university would be able to find temporary replacements in order to fill the void of its striking “employees.”

The purpose of the NCAA rules prohibiting student compensation and profit is to preserve a college athlete’s amateur status. Now, this decision may effectively render college athletes “professionals” so as to open the door to Nike sponsorships and autograph sales to Texas A&M fans. Proponents of the NCAA rules are wary that young adults, fresh out of high school, are prepared for the cutthroat industry.

There are many issues that the Board, the universities, and the NCAA will need to grapple with. The resolution of these issues will have far-reaching significance in the realm of labor law, as it is uncertain what the Board may deem as “payment” next for the purposes of determining employee status.  The finding that players are employees raises other troubling questions, such as whether they are also “employees” for purposes of the Fair Labor Standards Act, and are entitled to minimum wage and overtime pay, and whether scholarships are subject to state and federal taxes.  At a time when tuition costs are rapidly rising, it is unclear how universities will plan to absorb the cost entailed.

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